It is predicted that 24Q2 will deduct non-net profit at a record high, benefiting from increased DDR5 penetration rate+the increase in new AI products.

The company predicted 24Q2 revenue of 0.928 billion yuan, +82.6% year over month; net profit to mother of 3.6 to 0.4 billion yuan, median value of 0.38 billion yuan, +5.1 times year over year, +70.1% month on month; after deducting non-net profit of 3.15 to 0.345 billion yuan, median value of 0.33 billion yuan, +92.9 times year on year and +50.2% month on month, after deducting non-net profit, a record high in a single quarter. The same increase in 24Q2 performance mainly benefited from the restorative increase in demand for memory interfaces and module supporting chips, increased DDR5 penetration, and large-scale shipments of new AI “capacity” chips.

Q2 Connected chip revenue was +19.9% month-on-month, impressive? Server platform revenue +143.6% month-on-month.

1) The largest business is interconnect chips. The forecast for 24Q2 is a single quarter revenue of 0.833 billion yuan, +19.9% month-on-month, accounting for 90% of revenue, 63-64% of gross margin, median value of 63.5%, and a median value of +2.57pct month-on-month.

2) Is the second largest business out of power? The server platform predicts 24Q2 revenue of 0.091 billion yuan in a single quarter, +133.3% month-on-month, accounting for 10% of revenue.

24H1 DDR5 second-generation RCD chips have become mainstream products, and new DDR5 product iterations continue to advance.

24H1 DDR5 second-generation RCD chip shipments have surpassed first-generation products. The company's third-generation RCD chip is expected to begin large-scale shipment of 24H2, and the fourth generation RCD chip has already been launched. According to TrendForce, DDR5 memory module penetration will exceed 50% by 2024. As the DDR5 penetration rate gradually increases in the future and the company continues to iterate on new DDR5 products, performance growth can be expected.

Benefiting from the AI wave, Q2's three high-performance “capacity” chips generated revenue of 0.13 billion yuan, a significant increase over the previous month.

1) PCIe Retimer chip: Benefiting from strong demand for global AI servers and increasing company market share, shipments doubled month-on-month to about 0.3 million units in a single quarter in 24Q2. 2) MRCD/MDB chip: The server high-bandwidth memory module with the company's MRCD/MDB chip has begun large-scale trials with mainstream cloud computing/Internet vendors at home and abroad, with revenue exceeding 50 million yuan in a single quarter of 24Q2 (revenue of 20 million yuan in 24Q1). 3) CKD chips: In April 2024, the company took the lead in trial production of CKD chips in the industry. Benefiting from AI PC industry trends and pre-launch requirements for new client CPU platforms, revenue exceeded 10 million yuan for the first time in a single quarter in 24Q2.

The total revenue of the above three AI high-performance “capacity” chips 24Q2 was about 0.13 billion yuan, which was a significant increase over the previous month.

The leading domestic memory interface chip maintains an “gain” rating.

As a leading domestic memory interface chip, the company will fully benefit from the increase in DDR5 penetration rate and the AI wave. Furthermore, the domestic CPU market space is large, the proportion of domestic manufacturers is still low, and the company has broad room for future growth. The company's net profit from 2024 to 2026 is expected to be 1.327/1.968/2.573 billion yuan, respectively, corresponding to the 24/25/26 PE of 54/36/28 times, maintaining an “increase in holdings” rating.

Risk warning: risk of global trade friction; risk of product development; risk of customer concentration; risk of falling inventory prices.